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Builders utilizing escalation clauses to recoup rising costs

An emerging trend in the new construction market is the use of escalation clauses by builders to recoup unexpected costs from home buyers.

As reported in the the Herald-Tribune, Maureen Trimble thought she had a deal: $192,000 for a new three-bedroom house in North Port.

But in January, with construction already under way, she found her contract might not be as ironclad as she thought. Her builder sent a letter saying that it was raising the price by $51,000 to cover increased costs.

Wow, what a whammy to be hit with a 26.5 percent increase in the cost of building a new home after the execution of a contract. It is tough to believe that the builder, in this case Gulfstream Development Group, could have been that far off the mark. An attorney representing Gulfstream Development Group cited last year's hurricanes as the reason for the cost increases.

'Escalation clause' becoming common in housing contracts [Herald-Tribune]

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